The government has today taken another step towards the delivery of a new subsidy and policy regime, which is designed to drive investment in hydrogen infrastructure projects across the UK.
The Department for Energy Security and Net Zero (DESNZ) published the response to a recent consultation on hydrogen transport and storage infrastructure, including ‘minded-to positions’ that set out the government’s intentions for the next phase of policy development.
Developers across the UK have in recent years come forward with plans for a wave of hydrogen projects that aim to produce either green or blue hydrogen, and use the resulting low carbon fuel to generate power, deliver industrial processes, or provide zero emission transport. However, while a number of pilot projects have been delivered – often with support from government grant programmes – developers have warned commercial projects will require a new subsidy and policy regime if they are to reach a final investment decision.
As such, the government has been working on a series of ‘business models’ and contracts that could enable the development of a range of hydrogen projects, including the transport and storage infrastructure that is regarded as essential to the development of a hydrogen economy.
Today’s documents provide more details on how the government envisages these ‘business models’ operating.
For example, they confirm the government is minded to introduce a Regulated Asset Base (RAB) scheme alongside an external subsidy mechanism, in the form of private law revenue support contracts, to enable the development of hydrogen transport infrastructure.
Similarly, the government is proposing a revenue ‘floor’ to mitigate demand risk for providers of hydrogen storage capacity, which would be delivered through 15 year contracts. “We anticipate the initial focus for support to be geological storage, though we are minded to retain optionality to support above-ground storage where it faces similar market barriers,” the government said.
The documents also confirm plans to give the new Future Systems Operator a central strategic planning role to help manage the roll out of hydrogen transport and storage infrastructure and commits the government to publishing a ‘hydrogen networks pathway’ to set out the next steps in its plans for the development of hydrogen infrastructure.
In addition, the government promised to publish a response to its recent consultation on offshore hydrogen regulation during the third quarter of this this year.
And it said it was aiming to publish a consultation shortly on hydrogen blending that would set out some of its ‘minded-to’ policy positions ahead of a final decision on the future of hydrogen blending into the gas network, which is expected this year. “In this consultation, we also plan to set out the nature of our intended 2023 decision on blending into gas distribution networks given broader strategic, economic and safety considerations,” it said.
The update came on the same day as Transport Secretary Mark Harper announced £8m of funding has been awarded to two hydrogen projects in the North East through a competition run by Innovate UK.
One project led by ULEMCo is to develop hydrogen-powered airport ground-based support vehicles, such as tow trucks for aeroplanes and sweepers to clean runways, which will be used at Teesside International Airport.
A second project led by Element 2 aims to create new hydrogen refuelling stations, helping to provide the infrastructure needed to scale up the use of hydrogen as a fuel in the region. The funding will create four new publicly accessible hydrogen refuelling stations, increasing the number of refuelling stations in the UK by 50 per cent. The stations will be used to fuel a range of vehicles, from airside vehicles to heavy goods vehicles, including supermarket delivery trucks.
In addition, £300,000 of funding is to be provided to local colleges in the area to support upskilling the local workforce to work with hydrogen infrastructure.
“Hydrogen technology has great potential to decarbonise transport and help grow the economy,” said Harper. “Today’s winners illustrate the expertise the Tees Valley has as a pioneer in developing hydrogen tech. This investment will provide a further boost to the economy, creating skilled jobs and apprenticeships across the North East.”
The funding was also welcomed by Tees Valley Mayor Ben Houchen, who said: “We were one of the first areas to trial hydrogen fuels and this is continuing to pay off as we’ve been successful in securing this permanent refuelling station.
“Our airport and, indeed, our whole region continues to be at the forefront of the UK‘s net zero ambitions and this hydrogen station is another step forward to supporting the cleaner, healthier and safer industries of tomorrow. It backs up everything we’re doing in our low-carbon journey, including supporting the production and adoption of sustainable aviation fuel – one of the biggest issues facing the industry right now.”
Keep up to date with all the latest green business news by signing up to the free Daily and Weekly BusinessGreen Newsletters.
0 Comments